Tuesday, October 9, 2012

The Carlyle Group and the Sun Yee On Triad

Yesterday's post did not get much traction because the punch line was at the end.

So here is the short version.

I asked this man (David Rubenstein profiled on the cover story of the recent issue of Forbes),




To complete the following short letter to his clients:


Dear Limited Partners
We have lost some of your money in a company led financially by someone who the British Journal of Criminology asserts fronts for the Sun Yee On Triad.  
I believe this loss is "insignificant" because ...


The basis for this request was the subject of my last post.



John

16 comments:

Anonymous said...

So they own 4.643m shares, must have bought those at minimum 10 usd pieces, so let's round it up at 40m usd. CARLYLE ASIA GROWTH PARTNERS IV was launched with 1bn USD, we are talking about only 4% of the fund ! Peanuts ! Especially if the HK partner don't want to wake up with a horse head in his bed !

Anonymous said...

Actually, I wonder whether your last post didn't "get much transaction" because there's just not a lot of good ways for CG to spin this issue -- and once you made the issue salient, there's not too much left to say.

For anyone who's short, my concern would be that CG's mgt is using this go-private deal as an exit mechanism for a bunch of CG's principals who found themselves in FCMN up to the gills.

Yes, it would be an embarrassing and painful loss -- but it may be a less expensive option for CG insiders than just taking their lumps since, this way, all those shareholders (whom they tried to bar from bringing any type of class action lawsuit but got rebuffed) will have to take a bite of this poop sandwich too.

DCE in NYC

Nemo Incognito said...

"shut up mom! I only spend 4% of my allowance on hookers and blow! NBD!"
- Anon

No seriously folks, this is a catastrophic diligence fail.

Richard said...

Dear Limited Partners

We have lost some of your money in a company led financially by someone who the British Journal of Criminology asserts fronts for the Sun Yee On Triad.

I believe this loss is "insignificant" because next to the gravatas projected my silver hair and $500 tie everything is "insignificant".

Shawn said...

"insignicant" because that buys us the GaunXi bridge to Bo XiLai.

Well...

Anonymous said...


Well connected, big money Wall Street knowingly doing shady deals with corrupt Chinese business men with seemingly no regard to their own shareholders.
If I was a young, ambitious state Attorney General wanting to tread in the footsteps of Cicero (Eliot Spitzer without the sleaze), then Carlyle Group would be manna from heaven.

Colin P said...

I believe this loss is "insignificant" because I analogize it to sex. You realize there were certain things you shouldn’t do, but the urge is there and you can’t resist.*

Peace and love, David

*Real quote made by David Rubenstein, not Dominique Strauss Kahn, that surely didn't impress his wife, children and investors.

http://blogs.wsj.com/deals/2009/02/02/david-rubenstein-buyout-bubble-was-like-sex/

Anonymous said...

When its not actually 'my' money, of course anything else is insignificant as I'll get paid regardless of risk.

Anonymous said...

"I only spend 4% of my allowance on hookers and blow!"

The rest of it I wasted.

Anonymous said...

Is this going to be the plot line of Rush Hour 4?

Anonymous said...

From Carlyle Website:

"Prior to forming the firm in 1987, Mr. Rubenstein practiced law in Washington, D.C. with Shaw, Pittman, Potts & Trowbridge (now Pillsbury, Winthrop, Shaw Pittman). From 1977 to 1981, during the Carter administration, Mr. Rubenstein was Deputy Assistant to the President for Domestic Policy. "

That speaks an impressive background. After all, Jimmy Carter is the "best" president in USA presidency history. While he was the president of USA, everything worked so well, "benign inlfation" and great "foreign affairs". I am sure Rubenstein did a lot good stuff to USA while he was the Deputy Assistant to the President for Domestic Policy.

LOL. Frauds.

Anonymous said...

Best yet, another Carlyle founder:

"William E. Conway, Jr. is a Co-Chief Executive Officer and Managing Director of The Carlyle Group, a global private equity firm based in Washington, DC. Mr. Conway serves as chairman of Carlyle's investment committees and is based in Washington, DC.

Prior to forming Carlyle in 1987, Mr. Conway spent three years as the Senior Vice President and Chief Financial Officer of MCI Communications Corporation. Mr. Conway was a Vice President and Treasurer of MCI from 1981 to 1984. While at MCI, Mr. Conway arranged several billion dollars of debt and equity financing, both in the public and private financial markets, and negotiated MCI's most significant acquisitions and divestitures. Prior to joining MCI, Mr. Conway served in a variety of positions for almost ten years with The First National Bank of Chicago in the areas of corporate finance, commercial lending, workout loans and general management. "

Did anyone still remember that MCI/WorldComm was a multibillion dollar fraud?

Another Carlyle founder, was the CFO of MCI. What geniuses they are!

Anonymous said...

The first crack in the process will be delays in the debt underwriting. It is a large amount to swallow for a company with few hard assets. Reuters suggested on Sept 11th that the group of lenders should be finalized in 2-3weeks which indicates that even with some slippage the financing should have been announced by now. Has anyone heard anything on this process?

Colin P said...

Did anyone else just see the ESPN 30 for 30 that ended with David Rubenstein and David Booth bidding millions against each other for the original Naismith rules of basketball? A pusher of Chinese LBO's and an efficient market fanatic? Good God, my eyes can only roll so high!

Ben said...

With respect to the second to last question, the private equity consortium only issued a letter of interest in Focus Media. As such, there couldn't be financing lined up ahead of a real deal being announced - all that was announced so far was an intent to do a deal following due diligence. It is highly irregular that a private equity LOI be released to the public like that and potentially suggests that a private equity deal is in fact fake or not anywhere close to the finish line at least. In any event, I don't think they could line up financing for a deal that doesn't exist yet.

Anonymous said...

D.R. said this: “I analogize [private equity] to sex...You realize there were certain things you shouldn’t do, but the urge is there and you can’t resist.”—speaking at Harvard Business School about the buyout bubble.

What a revelation indeed. I assume he cannot resist frauds as well.

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